Facebook Inc.
/quotes/zigman/9962609/delayed/quotes/zigman/9962609/lastsaleFB reported sharply higher profit on stronger sales of ads after the bell Wednesday, but admitted that revenue growth would slow into next year while spending remains high. Spooked investors sent the stock into a dive, with shares falling more than 8% in late trading. MarketWatch tech editor Jeremy Owens (@jowens510) and reporter Jennifer Booton (@jbooton) live-blogged the earnings report and subsequent conference call.

Look for more on Facebook's outlook from me as well as more on Facebook earnings in general on MarketWatch. Thanks for tuning in, everyone!

6:04 pm | by Jennifer Booton

Yeah, surprised no one delved into the outlook more. Shares of Facebook currently down around 7%. Thanks for tuning in everyone, call has ended.

6:03 pm | by Jeremy C. Owens

Anyway, I'm going to dive into this outlook a bit more with a focus on this stock-compensation plan that Facebook says would have cost it $1.8 billion (!) if it had been in effect this year. I have confirmed that figure with the company through email and am hoping they will give me CFO or someone to talk more about it. Very interesting.

6:02 pm | by Jeremy C. Owens

In case you were wondering why the number of posts decreased after the outlook, that is why - bad questions, pat answers.

6:01 pm | by Jeremy C. Owens

Those were some super lame questions from analysts today. None of them focused on anything people will care about from this report. Very disappointed in all of you, analysts.

6:00 pm | by Jennifer Booton

Zuck talking about 'search' -- says driving most of the volume today is people trying to find things that are already on facebook, not necessarily random answers to random questions like they would on, say, Google. But Facebook is still one of the largest search engines in the world.

Speaking of Facebook Live, I just had an alert pushed to my phone that my brother is currently live videoing his brand new mechanical stand-up desk. Hey bro.

5:40 pm | by Jennifer Booton

On MAU growth, Facebook says it is seeing growth in India, Mexico and Brazil. These are emerging markets that are highly coveted by tech companies right now. Apple's Tim Cook takes time on every earnings call to talk about how great India is. So it's a good sign for Facebook that as Internet availability spreads in these countries (which the Zuckerberg Foundation has made a core mission...), Facebook use is also going to grow.

5:35 pm | by Jeremy C. Owens

If they passed the mic to me right now, I would have to ask about them to expand on that plan for employee stock compensation, no matter what else I'm interested in at Facebook. take the bullet, guys.

5:34 pm | by Jeremy C. Owens

Most of the questions have been pretty vanilla and soft so far considering that outlook statement. Seems analysts already had their ?s planned and weren't ready to pivot when Facebook actually broke some news in there.

5:32 pm | by Jeremy C. Owens

I feel for Facebook's poor CFO - Zuck and Sandberg get to talk about how great Facebook is, he gets to break the bad news to Wall Street.

5:28 pm | by Jeremy C. Owens

Aaaaand we're seeing the results - Facebook stock now down 6%.

5:28 pm | by Jeremy C. Owens

I will say this on that last note - it will not be good for Facebook investors, but man it would be huge for recruiting in Silicon Valley.

5:28 pm | by Jennifer Booton

Facebook shares plunging after that outlook. They're currently down 6%.

5:27 pm | by Jeremy C. Owens

On that last note - Facebook said it would change the way it expects employees to pay the taxes on their stock awards, which was on them before. they said it would have cost them $1.7 billion this year, if I'm not mistaken. I will need to go back on transcript for that, but that could be huge.

5:26 pm | by Jeremy C. Owens

Here are my notesRevenue growth rates will decline in Q4, as FB has said before.Total payments and other fees will also decline.Expense guidance: FY 2016 growth will be at lower end of 30%-35% range.share-based compensation will be $3.2B-$3.3B CapEx for 2016 - $4.5B2017: 50% rev growth will "come down meaningfully"Spending and CapEx will growFacebook is going to pay employees' tax bills?

5:19 pm | by Jeremy C. Owens

Sandberg didn't really get into election advertising and how that helped Facebook, I was expecting that. Hopefully an analyst asks.

5:18 pm | by Jeremy C. Owens

According to Bloomberg News, Snapchat has 150M daily active users. So Instagram's clone of Snapchat Stories has gotten to 2/3 of Snapchat's usage in about 2 months. That is the power of FB/IG.

5:16 pm | by Jeremy C. Owens

Guess investors aren't liking this call so far - Facebook now down 2.6% in late trading.

5:16 pm | by Jennifer Booton

It's getting more and more difficult to compare Facebook to Twitter. FB is simply eons ahead of it. One competitor that we should start to compare Facebook to, however, is Snapchat. While Instagram stories have 100 million DAUs, I'd think Snapchat has many, many more. Snapchat is currently pursuing an IPO. Still, though, the huge growth of Instagram Stories is impressive, and there's a chance that over time it will be taken as the more serious of the platforms over Snapchat and that the two can continue to coexist.

5:14 pm | by Jeremy C. Owens

Had to go look this up - Twitter has about 100 million daily active users as of August. Zuck said Instagram Stories has 100 million daily active users. Instagram Stories launched in August. Twitter launched in 2006.

5:14 pm | by Jennifer Booton

Small businesses are now also increasingly posting videos, says Sandberg.

5:12 pm | by Jennifer Booton

Now Sheryl Sandberg has taken the call. She usually reads financial data then provides anecdotal stories about how its ads are helping businesses grow.

5:11 pm | by Jennifer Booton

He also says that the Touch controller for Oculus Rift will finally ship in early December after delays.

Zuck on election: 109 million people generated 5.3 billion post, comments and likes on the election in last nine months. Estimated 2 million people registered to vote through Facebook's efforts on that.I imagine Sandberg will talk about how much money Facebook is generating from election ads.

5:06 pm | by Jennifer Booton

Zuckerberg says the Olympics “were huge” on Facebook, and again talks about how many athletes were using live video, including Michael Phelps, which announced his retirement on Facebook Live. He’s also touting growth from elections (we all have the friends who constantly make posts about the election…)

5:05 pm | by Jeremy C. Owens

Facebook is testing some camera usage for Messenger, Zuck says.

5:05 pm | by Jennifer Booton

I will say, I've had more and more friends do live videos in the past two months. Facebook makes it easy to launch live videos...I've accidentally done it a few times when trying to hit a different button.

Facebook generated $4.01 in revenue per user worldwide inthe quarter, up from $3.82 last quarter and $2.97 a year ago. That amount increased in every geography from last quarter except Europe, which stayed at $4.72.

4:56 pm | by Jennifer Booton

Speaking of people who don't have a Twitter account, this chart and tweet are just downright mesmerizing.

Less than 5 minutes to the conference call, which should provide more news than the release, which is always bare-bones for Facebook.

4:53 pm | by Jennifer Booton

Here's a slice of Jeremy and Jan's discussion on Twitter in case you are one of those people who don't have a Twitter account. The argument is that right now Oculus isn't supposed to be a huge revenue driver for Facebook, just like GoPro's content strategy isn't expected to be a huge revenue driver for the action camera maker. Over time, that could change.

True, and columnist Therese Poletti (who sits right next to me) just talked to the Fitbit CFO one-on-one about that. He told her that they have had serious manufacturing issues with the new Flex 2, and took a big charge for it. Likely won’t be able to satisfy demand in holiday quarter because of it. Huuuuuuuge issue there.

It's still TBD how Facebook plans to monetize Facebook Messenger and WhatsApp. Earlier this year, the company rolled out an extensive chatbot capability for Messenger, which learns from users and acts as a smarter personal assistant akin to Siri. Now when you type in Messenger it automatically offers to add things to your calendar when you use phrases such as 'tomorrow' or 'today' and will offer to call an Uber for you if you use the word 'Uber.'

4:41 pm | by Jeremy C. Owens

My dream for this call is for Facebook to finally disclose some actual numbers for Instagram, but have a feeling I will have to keep dreaming on that. After all, Google still isn't breaking out numbers for YouTube, which it acquired long before Facebook bought Instagram.

4:40 pm | by Jeremy C. Owens

In other words, Facebook better hope this revenue and profit growth for core Facebook ad product and Instagram continue, because it doesn't look like their other initiatives are adding much so far.

4:39 pm | by Jeremy C. Owens

Oculus is just one of Facebook's big-money acquisitions from the past few years, a group that also includes Instagram and WhatsApp. We can assume that Instagram is a growing part of Facebook's ad revenue, especially the big growth in mobile ads, but they have never told us exactly how much Instagram is contributing. Meanwhile, WhatsApp is still mostly pre-revenue, and Oculus doesn't seem to be setting the world on fire yet.

4:39 pm | by Jennifer Booton

Expect some questions on this call about video metrics. During the quarter, it came out that Facebook had been incorrectly calculating how long people were watching videos, thus overstating the video metrics it was providing to advertisers. However, Zuckerberg took valuable space in his brief two-sentence statement to once again express the value of video.

4:38 pm | by Jeremy C. Owens

Since Oculus launched, Google has put forth a VR headset meant for Android phones to fit into, and Microsoft has announced its own VR initiative that will go through OEMs. For those thinking about buying an Oculus, it might make sense to wait to see if some of these new options offer more bang for the buck.

4:34 pm | by Jeremy C. Owens

But that still isn’t a good look for Oculus, especially with the growing VR competition.

4:34 pm | by Jennifer Booton

Also alarming is the fact that in that 'payments and other fees' category, revenue only fell in Facebook's core U.S. and Canada geographic market on a quarter-over-quarter basis. That's despite the U.S. and Canada being 2 of the 22 launch countries for Oculus Rift.

4:34 pm | by Jeremy C. Owens

Still, the y-o-y decline in non-advertising revenue was nearly as expected - analysts forecast $196 million for that total, Facebook report $195 million.

4:30 pm | by Jennifer Booton

Sequentially, revenue from 'payments and other fees,' which as Jeremy notes includes Oculus, slumped to $195 million from $197 million. Zuckerberg has admitted that initial sales of the Rift were disappointing. Expect it to get questions about that on the call, and then chat a lot about how the holidays are going to be huge for VR. That's still to be determined, despite the influx of headsets this year.

4:30 pm | by Jeremy C. Owens

Reminder that Facebook tried to temper expectations for growth in the second half of the year during last quarter's earnings. Seems that wasn't necessary.

4:28 pm | by Jeremy C. Owens

That number, basically a catch-all for everything that isn't advertising, would also have to include Oculus Rift sales, correct? Kinda worrisome that it is down year-over-year considering Oculus launch was within last year.

4:23 pm | by Jennifer Booton

One negative thing to note is that payments and other fees, which are a TINY portion of Facebook’s total sales, declined by another 3% during the quarter. Payments are a big deal for companies like Apple and Samsung, which try to compete with the super successful companies such as PayPal and Venmo, but it hasn’t really taken off for Facebook. We’ll see if that changes at all as Facebook Marketplace gains steam.

4:23 pm | by Jeremy C. Owens

Would be surprised if Facebook didn't clock at least a small gain in after-hours following this kind of beat, especially after falling 1.8% in regular trading.

4:22 pm | by Jeremy C. Owens

That makes more sense.

4:22 pm | by Jeremy C. Owens

Aaaaaand now Facebook stock is turning around, up about 0.5%.

4:21 pm | by Jennifer Booton

Did a quick write-up of all the earnings info here. As Jeremy said, solid beat all around. The company has a very long history of topping Wall Street expectations. It's pretty much surpassed them in every quarter but one since its IPO.

4:21 pm | by Jeremy C. Owens

Twitter suffers from comparisons to Facebook, but really, just about any company would suffer when compared with those growth rates.

4:15 pm | by Jeremy C. Owens

But, ignoring reality vs. expectation, you have to marvel at how Facebook continues to grow after more than four years as a public company. Profit is up 166% year-over-year, revenues up 56%. That is amazing growth.

4:14 pm | by Jeremy C. Owens

I would guess the beat isn't as big as some had expected.

4:14 pm | by Jeremy C. Owens

Not seeing any reason why investors would be disappointed by this report, its nothing but beat beat beat beat beat.

4:13 pm | by Jeremy C. Owens

No forecast included in release, imagine we'll get that from the call.

4:12 pm | by Jeremy C. Owens

Mobile ad revenue: 84% of total advertising revs, up from 78% a year ago.

We'll go through some other important Facebook metrics as we look for why the stock is falling, though the decline has settled down to more like 1%.

4:09 pm | by Jeremy C. Owens

Zuckerberg mailed in his quote in the earnings release as usual."We had another good quarter," said Mark Zuckerberg, Facebook founder and CEO. "We're making progress putting video first across our apps and executing our 10 year technology roadmap."

4:08 pm | by Jeremy C. Owens

That beats on both lines. FactSet says analysts were expecting adjusted earnings of 97 cents a share on sales of $6.93 billion.

4:08 pm | by Jeremy C. Owens

The numbers: Net income of $2.38B, or 82 cents a share, on sales of $7.01 billion. Adjusted profit of $1.09 a share.

4:07 pm | by Jeremy C. Owens

The numbers: Net income of $2.38B, or 82 cents a share, on sales of $7.01 billion. Adjusted profit of $1.09 a share.

4:07 pm | by Jeremy C. Owens

And now we have Facebook. Shares down 2% after results.

4:06 pm | by Jeremy C. Owens

Zynga down 5% after its earnings, so obviously SOMEONE cares.

4:05 pm | by Jeremy C. Owens

Zynga and Facebook were so symbiotic 4-5 years ago, now that relationship is vitually nonexistent.

4:04 pm | by Jeremy C. Owens

Speaking of when Facebook went public, Zynga is also reporting today. Nobody cares.

4:04 pm | by Jennifer Booton

The consensus is calling for year-over-year sales growth of 50% to around $6.9 billion

4:04 pm | by Jeremy C. Owens

If you had told me I would be typing that last sentence when I covered Facebook's IPO (and subsequent decline), I would have laughed and laughed.

4:03 pm | by Jeremy C. Owens

Facebook closed with a loss of about 1.8%, giving it a market cap of roughly $360B.

4:03 pm | by Jennifer Booton

sell-side analysts surveyed by FactSet expect Facebook to report profit of 97 cents a share, compared with 57 cents a share in the year-earlier period.

4:02 pm | by Jeremy C. Owens

We expect the report any minute now.

4:02 pm | by Jeremy C. Owens

Welcome to our Facebook earnings live blog everyone!

4:01 pm | by Jennifer Booton

Hey guys Facebook due any minute stay tuned

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